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SA farmers court Asian market

Jun 25 2012 13:16 Reuters

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Johannesburg - South African maize and citrus farmers are setting their sights on Asia as they grapple with increasing competition in Africa and falling demand in Europe.

With promises of booming demand in the East and low shipping costs, South African farmers are vigorously courting Asian buyers, focusing on China.

“We have met with some Chinese buyers. They are already in South Africa looking at opportunities to buy South African maize," Grain SA chief executive Jannie de Villiers said.

China’s 2012/13 corn (maize) imports are forecast at 7 million tonnes, a US Department of Agriculture June supply-demand report showed.

South Africa's grain trade is market-driven and producers face few government restrictions. The government’s May forecast for the 2012 crop was 11.056 million tonnes, against a 10.36 million tonnes harvest in 2011.

Traditionally South African maize farmers have exported surpluses to destinations within Africa, mainly to neighbouring countries, while fresh fruit producers have cultivated close ties with buyers in Europe.

However, a series of bumper maize harvests in Zambia and Malawi have trimmed South Africa’s market share in the region.

Another problem has been that some African countries remain wary of genetically modified crops, which account for most of South Africa’s maize production.

“It is not a question of moving away from the traditional markets, but securing more alternative markets,” Piet Faure, a soft commodities analyst at CJS Securities, said.

Asian markets are attractive because of their proximity to South African ports and the reduced delivery times compared with the European Union, United States and South America, Faure said.

In the past year, Africa’s largest maize producer has sold to countries such as South Korea, Kuwait, Japan, Iran and Taiwan after a vigorous marketing campaign in Asian markets.

"The trade balance in the East is beginning to favour South Africa," Agriculture Minister Tina Joemat-Pettersson said.

Citrus producers, too, are looking to Asia amid concerns of  slowing demand in Europe as the region’s debt woes rumble on.

South Africa is the world’s second-largest citrus supplier after Spain, exporting 2.5 million tonnes of fresh fruit annually, of which about 70% is destined for Europe.

The National Agricultural Marketing Council and the department of agriculture have now identified China, Ukraine, Kazakhstan, Singapore and Malaysia as attractive new markets for South Africa, a report in May said.

The report added that though Europe remains a vital outlet, increasing output in southern hemisphere countries, rising export costs and stagnating consumption in the EU posed challenges to citrus producers.

The producers have indicated that they would be comfortable in the long term with shipping only 40% to 50% of fruit export volumes into Europe.

South Africa announced recently that it has started exporting fresh fruit to Thailand after 14 years of talks between the countries.

 
grain sa  |  farming
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